Tax Consulting Services we offer include the following areas which are explained in more detail below:
Sales & Use Tax Audit Defense
Tax audits strike fear in many hearts, and for very good reasons. States have become very aggressive in their audit frequency and tactics to bolster their revenue. An adverse or mismanaged audit can have dire financial consequences for a company. That is why a targeted and effective response to audits is essential and well worth bringing in outside expertise, the sooner the better. BWC has the experience to assist with audits with all state and local tax authorities. Working with your staff, we will identify significant areas of audit exposure and develop a plan to effectively address exposures on both a prospective and historical basis.
Typically audit defense engagements include the following tasks:
· Meeting with the auditor to devise an equitable audit approach,
methodology, and plan,
· Retrieving documentation and organizing items based on exemptions
· Reviewing all audit work papers in detail, including the audit
methodology and sampling procedures if any,
· Identifying overpayments to incorporate into the audit work papers,
· Determining if any proposed penalty and interest assessments can be
waived or reduced,
· Documenting and presenting all findings to you and the auditor, and
· Pursuing unresolved issues through the appropriate channels, with
your approval to reach an agreed upon audit.
Tax auditors are trained to find and assess tax deficiencies, not tax overpayments and credits, therefore the liability may be materially overstated. BWC succeeds at tax audit defense because we have experience as a former tax auditor. We know the approach that tax auditors take, how they think, and where to look for credits to offset audit deficiencies. Because auditors job is to assess tax, these credits are often overlooked. We address this situation by working closely with state auditors on behalf of clients to make certain that the correct amount of tax is paid, particularly by ensuring that exempt items are excluded and all credits due are included in the audit. We can help reduce the liability at any stage, even after it has been paid. As a result, even though an audit liability appears set in stone, there is usually an opportunity to decrease the assessment. Past experience has shown that it is quite possible to turn a tax assessment into a refund claim provided the window of opportunity is still open.
From offering advisory support, reviewing certain items, communicating with the auditor on questionable items, or handling the entire audit from start to finish, we can provide assistance at any point during the audit process.
Sales/Use Tax Refund Analysis
Tax laws change constantly, and items that may have been previously taxable may now be exempt. Your company may also qualify for an exemption based on your type of business activity or as a result of a court case. If your company has not reviewed its’ accounts payable or use tax accrual process for law changes recently, then you are overdue for a refund analysis of your accounts payable transactions and use tax accrual process to determine if tax has been overpaid.
A Sales/Use Tax Refund Analysis is designed to identify sales/use tax errors and provide proactive recommendations to mitigate future tax administration errors and inefficiencies. It includes a review of all sales/use taxes paid, including sales tax paid to vendors, self-assessed use tax, and all sales/use taxes paid in any state audit assessments. Our review process is customized to your specific business operations and we drawn upon our experience in many industries and jurisdictions to maximize your refunds. We will identify potential overpayments, prepare schedules and supporting documentation, and cite state laws, regulations, and court cases to substantiate our findings. Pending client approval, we will file refund claims with states and vendors as required by statute and, we work with the states and vendors until you receive the sales/use tax refund check(s) or credit(s).
Our review process may also include a review of transactions not taxed to determine potential sales/use tax liabilities. We will then report our findings to you so future underpayments can be examined in more detail and minimized.
As a result of our work, we will provide you with recommended solutions designed to eliminate both overpaid and underpaid sales/use taxes. Very often, the refunds generated by sales/use tax overpayment recovery are “found” money that can be used to fund projects that achieve solutions without requesting any additional budget. Refund claims can be filed at any time subject to statutory limitations separate from an audit.
Nexus Study and Taxability Analysis
It is essential that a company know exactly how its products and services are taxed, in the jurisdictions that your company does business in. Your company is responsible for registering and collecting tax in those states in which your company has “nexus”, defined as presence or activity. Nexus may be established with a jurisdiction if your business has sales persons, repair persons, deliveries with your own truck, inventory, agents, or attends trade shows in that jurisdiction.
Companies unknowingly can be conducting taxable activities establishing nexus without being registered, thus creating serious tax liabilities. In fact, when a company does not file tax returns when they should, the statute of limitations does not start running, allowing jurisdictions to assess tax on transactions back to the first day nexus was created! Therefore it is critical to identify and minimize these tax liabilities with a nexus study and taxability analysis to assist you in becoming compliant as well as mitigating any past and/or prospective sales/use tax liabilities.
We will research and analyze your company’s products and services in the jurisdictions where you currently do business or where you are planning to do business. The goal of this task is to ensure proper tax collection on goods and services sold as well as proper tax treatment on purchases. Next, we prepare a Taxability Decision Matrix for each of the jurisdictions. The matrix is an easy-to-read table that lists each product or service and its taxability to assist you in making these tax determinations.
BWC defines product and service tax groups from a sales or purchasing perspective and researches taxability rules on a item-by-item basis. To reduce potential tax-associated risks, including underpayment, BWC can identify the jurisdictions where the business should be registered through a nexus study and then assist in implementing corrective actions, such as voluntary disclosure negotiations and new procedures.
To determine past tax obligations, we review and analyze the business activities conducted by your company and match them with the activities listed by the jurisdictions as creating nexus. Although our main focus is the determination of where your company has established nexus for sales tax, we will also provide a high-level overview of potential liability for other taxes such as income, property, payroll, etc. We then quantify the potential tax exposure and provide alternatives of how to proceed. Recommended actions could include voluntary disclosure, prospective registration, activity monitoring, or terminating registrations.
Voluntary Disclosure Agreements
Most jurisdictions have voluntary disclosure programs that provide an opportunity for businesses that have recently become aware of their tax obligations to come forward on an anonymous basis to meet those obligations. BWC has been very successful in these engagements by negotiating the most favorable settlement possible without compromising your identity while also limiting the look back period and potential liability. Many states go back 10 years or longer to assess tax, penalty, and interest. As part of the voluntary disclosure agreement, we will try to limit the prior period to, generally speaking, to 3 years and seek to have the penalties waived.
The ability to negotiate is generally eliminated once a state contacts an unregistered corporation. If a state concludes that you should have been registered, it can assert significant penalties for failure to register or file prior year sales and use tax returns. Furthermore, a state may hold a company’s officers personally liable for failing to comply with its rule and regulations.
Also, approaching the states voluntarily and anonymously will protect your personnel from the burden of responding to future state questionnaires and audits. In addition, we can assist with any of the recommended actions including registration, liability calculation, and establishing procedures to prevent the need for prospective voluntary disclosure agreements.
Sales and Use Tax Training
BWC offers customized Sales and Use Tax training focusing on the practical application of sales/use tax concepts for your specific industry and business. Experience has shown that companies can minimize their tax expense and administrative costs related to accurate compliance by giving employees the knowledge and the tools to excel at their jobs.
Typically training is offered to personnel who handle the various aspects of sales and use tax determinations including the tax department accounting, sales, order entry, accounts receivable, purchasing, accounts payable, and engineering. Training consists of live interactive sessions along with customized training booklets and quick-reference charts and/or job aids.
Sales/Use Tax Return Preparation Services
We can provide you with assistance for your monthly sales/use tax return preparation and filing process to make sure that your tax returns are prepared correctly and in a timely manner. Generally necessary tasks include data accumulation, return preparation, filing, and payment transmittal. In addition we will also handle notices and inquiries from tax authorities and appropriately respond to them.
Sales/use tax research relative to specific tax issues in support of your tax administration endeavors. We customize this service to meet your specific needs at any point in time.
Some of the services provided in this area include:
· Analysis and research of specific sales/use tax issues
· Legal support for preliminary administrative hearings and pre-court
· Assist with issue development across jurisdictions
· Assist with the development of the sales/use taxability decision matrix
in support of automated tax systems.
We will provide you with a written summary of our findings, including necessary justification from laws, regulations, and court cases.
Tax Consulting Services we offer include the following areas which are explained in more detail below: